Lake Shore Bancorp plans structure change and public offering

DUNKIRK, N.Y. - Lake Shore Bancorp, Inc. (NASDAQ:LSBK), the parent company of Lake Shore Savings Bank, with a market capitalization of $75.58 million and an attractive dividend yield of 5.37%, announced a significant structural change with the adoption of a Plan of Conversion and Reorganization by its parent mutual holding company, Lake Shore, MHC. According to InvestingPro data, the company maintains a FAIR financial health score, suggesting stable operational fundamentals. The plan involves a "second step" conversion from a mutual holding company to a stock holding company structure.

As part of the conversion, Lake Shore Savings Bank is seeking to change its charter to a New York-chartered commercial bank. The mutual holding company, which currently owns about 63.4% of Lake Shore Bancorp’s outstanding shares, will form a new stock holding company to succeed the current company. The bank’s stock currently trades at $13.74, near its 52-week high of $14.21, with InvestingPro analysis suggesting the stock is slightly overvalued at current levels. This new entity will offer for sale shares of common stock that represent the mutual holding company’s interest in Lake Shore Bancorp.

Eligible account holders of the Bank as of December 31, 2023, will be given first priority to subscribe for shares in the new holding company. The total number of shares to be offered will be determined by an independent appraisal of the new company’s pro forma market value.

Minority shareholders of Lake Shore Bancorp will have their shares converted into the new holding company’s stock based on an exchange ratio reflecting their percentage ownership, excluding additional shares purchased in the offering and fractional shares adjustments.

The proposed transaction is anticipated to be completed in the third quarter of 2025, subject to regulatory approvals, as well as approval by Lake Shore, MHC’s members and Lake Shore Bancorp’s shareholders, including a separate vote by the company’s minority shareholders.

Further details about the transaction and stock offering will be provided to shareholders and members following regulatory approval.

Lake Shore Bancorp, Inc. is a community-oriented financial institution headquartered in Dunkirk, New York, with ten full-service branches in Western New York. The company, which generated revenue of $25.85 million in the last twelve months and trades at a P/E ratio of 15.66, is listed on the NASDAQ Global Market under the symbol "LSBK". For deeper insights into Lake Shore Bancorp’s financial metrics and growth potential, investors can access additional analysis through InvestingPro, which offers exclusive financial health indicators and investment tips.

This announcement contains forward-looking statements subject to risks and uncertainties, including delays or difficulties in completing the proposed transaction. Shareholders are advised to read the registration statement, proxy statement, and prospectus carefully when they become available for more information on the transaction.

The information in this article is based on a press release statement from Lake Shore Bancorp, Inc.

In other recent news, Lake Shore Bancorp, a regional bank, has announced the renewal of its employment agreement with Kim C. Liddell, the President and CEO of both the company and its subsidiary, Lake Shore Savings Bank. The new contract, effective from December 16, 2024, replaces the previous agreement and spans an initial three-year term with potential for extension based on performance evaluation. The bank has maintained profitability over the last twelve months, despite challenging market conditions, according to InvestingPro analysis.

In more recent developments, Lake Shore Savings Bank has seen the termination of a Consent Order by the Office of the Comptroller of the Currency (OCC). This regulatory directive, addressing issues in information technology, security, and compliance, was lifted along with the bank’s Troubled Condition status. The termination came earlier than anticipated, indicating the bank’s swift response to the operational challenges identified by the OCC.

Liddell’s compensation package includes a base salary of $605,000, potential increases, performance-based cash bonuses, and eligibility for long-term incentives. If Liddell leaves the company voluntarily without "good reason," he is entitled to accrued benefits, while involuntary termination or resignation with "good reason" entitles him to a severance payment and 12 months’ worth of life, medical, and dental coverage costs. The bank also has a supplemental executive retirement plan (SERP) with Liddell, effective from April 24, 2023. Despite these positive developments, the bank’s forward-looking statements caution that there are still various risks and uncertainties that could affect future performance.

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